annual report 2003-2004 Featuring About Your Company It’s about Good Friends Plus It’s about Discovery It’s about Easy It’s about New Tastes & Good Food Financials for 2003–2004 Revenue to th Nova Scotians Welcome to the 74 NSLC All Nova Scotians Profit from the 38.2% The annual report is produced by the Nova Scotia Liquor nslc’s $167.8 Million Corporation and submitted to the Honourable Ernest Fage, Minister Responsible for the Administration of the NSLC, for the Annual Report fiscal year ended March 31, 2004. Head Office 93 Chain Lake Drive Bayer’s Lake Business Park Halifax,Nova Scotia Representative Sales Canada Contribution by Category Operating B3S 1A3 Costs Customer Service 1.800.567.5874 Telephone 902.450.6752 13.0% Fax 902.453.1153 Coolers Web Site www.nsliquor.ca This 3.6% Chairman Peter McCreath annual Cost of President and CEO Ken Barbet report is Product Independent Auditors Grant Thornton LLP Layout and Design Pavonis Limited unlike any 48.8% Photography Mindseye Images Food Stylist Debbie Page other issued On the Cover A Bavarian cherry chocolate by the nslc in cake served with BelleVue our 74-year history. Kriek beer and prepared Spirits by Chef Raj Gupta of the Rightfully so because Casino Nova Scotia Hotel 30.9% for the NSLC’s first Beer Gala, the nslc has changed August 18, 2004. more in this year than in any other year in our history. We are steering in a new exciting Wine retail-orientated direction. We are 15.9% becoming a place where most people Non Table of Contents want to shop when they want to turn a Beer Liquor Welcome to the 74th NSLC Annual Report . 1 gathering into a social occasion. 49.5% 0.1% Chairman’s Report . 2 Throughout the past, year our executive team worked closely with President’s Report . 4 our Board to set goals for our company. We reported our objectives to About Your Company . 6 government through the Minister responsible for the administration It’s About Discovery . 8 of the nslc and diligently worked to exceed our objectives. It’s About Good Friends . 10 In fall 2004, we will introduce our new corporate brand with its rich It’s About Easy . 12 retail feel. Gone is the nslc Commission of the past with its product It’s About New Tastes & Good Food . 14 control focus. Hello to new and exciting retail challenges and rewards. NSLC Events (Beer Gala, Port of Wines Festival) 16 The better we perform collectively, the greater the revenues to the Our New Look . 18 Province of Nova Scotia. These funds are then put to work throughout Management Discussion and Analysis . 20 our province. Auditor’s Report . 23 Balance Sheet . 24 Have you been to our new liquor stores or newly-renovated stores? rease in If you haven’t you’re in for a treat. Come on in and take your time – nc P Statement Of Earnings and Retained Earnings 25 I ro we’re confident you’ll like what you see. % f Statement Of Cash Flows . 26 3 it . s Notes To The Financial Statements . 27 We also will be soon introducing a magazine filled with useful 6 2002/2003 NSLC Events (Rum Festival, Scotch Ceilidh) . 30 product information, entertaining ideas, recipes and other joys of $157.9 Million Five-year History . 32 being a Nova Scotian. Financial Performance . 33 All this work has been done to underline the fact that we are changing 2003/2004 Sales By Stores . 34 the way we operate, the way we serve our customers and the Nova Source Of Gross Sales Revenue . 39 Scotia public. The more we innovate, think in a different manner and $167.8 Million Canadian And Imported Sales . 40 serve our customers better, the greater the benefits to us all. Five Year Sales Comparison . 41 Enjoy. We hope to see you soon in one of our stores. Be sure to tell us Five Year Volume Comparison . 42 what you think of our new look and outlook. Corporate Information . 43 Executive Officers . 44 II 1 uring 2003–2004, the nslc returned a record forward as we transform the nslc over the coming Dprofit to our shareholders, the people of Nova years. As a Board, we are working in concert with Scotia. We have surpassed the financial target for our President, Ken Barbet and his management to the year, which had been our commitment to the ensure that the nslc becomes a hallmark amongst Government of Nova Scotia. We recognize that our crown corporations in Canada, and one that will yield performance at the nslc has a direct, meaningful substantial benefits to all our stakeholders. impact on the policies and programs of the Government of Nova Scotia and we are guided in As a Board, we are committed to continuing to improve our own strategies by an acute understanding of our our governance practices in order to ensure that we responsibilities in this regard. are providing the best possible oversight, accountability and transparency as are required in today’s business The Board is convinced that the corporation’s financial world. For example, this past year, we have re-vamped success flows directly from sound, strategic business our audit and risk management procedures, and thinking and well-managed execution. The business have established Board committees to oversee and goal of transforming the nslc from its historic role as review the Corporation’s commitment to our social a government distributor of beer, wine and spirits to a responsibility and local economic development modern, world-class retail business driven by customer responsibilities under the Liquor Control Act. needs and shareholder return is certainly delivering results in the short term. But more important, we We are aware that our customer-focused approach believe, is positioning the corporation to deliver solid to our business can occasionally present challenges growth and increasing returns into the future. to local leaders in some communities. We attempt to be sensitive to the concerns of local leaders. At We are aware that many of the Board’s decisions are the same time, our legislated responsibilities are to Chairman’s public ones and subject to the scrutiny of observers. our stockholder and to our consumers, who are also We point out, however, that while Board decisions may the people of Nova Scotia. Our business strategy is be controversial, the Board has been resolute in acting research-based; our intent is to meet the wishes and report in a fair-minded, transparent and forthright manner so aspirations of our customers. “2003–2004 was as to safeguard the integrity of the organization and its business goals. Initial response to the changes we have begun, a watershed year including to our store network, very much meets for the NSLC, one Key to the business strategy is having the latitude to the expectations of our customers – as our business do what must be done to satisfy the most fundamental results would indicate. The Government’s decision in which has set operating need of a world-class retailer – to understand, 2001 to give the nslc a mandate to operate as a retail the organization anticipate and respond to the needs of the consumer. business is the driving force behind the nslc’s new approach to retailing beverage alcohol. The support of solidly on a growth In terms of key consumer dimensions such as the Government as we go through these changes has path for the years product selection, variety, convenience and value, therefore been essential to the success to date. The end the corporation made significant strides last year, result is proving to be continued growth in the returns to come.” increasing the store assortment by 30 per cent, vastly to our shareholders and increased customer satisfaction. improving our stores including the introduction of cold rooms for beer and coolers, and continuing to On behalf of the Board, I wish to thank our Minister for add the many benefits of store-in-store convenience his continuing support. We thank our President, Ken with grocery retailers. Transactions and visitations Barbet – recently confirmed in that position by the showed marked increases across the network. Our Government – together with his management team important consumer report card – the Customer and the full staff of the nslc for their contribution to Satisfaction Index – also reported over the first year making 2003–2004 the most successful year in the of our survey that seven out of every ten customers history of the nslc. The Board of Directors moves rate their satisfaction with the nslc as a nine or forward to 2004–2005 with optimism and enthusiasm. better out of ten. This puts the nslc into the highest levels of satisfaction that are achieved within retail organizations in North America. Peter McCreath Chairman The Board is pleased with and takes pride in the new NSLC Board of Directors Peter McCreath discussing licensee issues at Halifax licensee The Bitter End, Argyle Street, Halifax. management team now in place, with their extensive private sector experience, to guide the organization 2 33 For the nslc, 2003/2004 was a year of A world-class retail business needs a management and control system that integrates point-of-sale, ordering, distribution extraordinary achievement and administration. It needs a technology platform that can cope with the volume of business generated by more than Since September 2003, in my capacity as acting President, it 18 million customer transactions to our retail network – up has been my privilege to lead the organization through an 1 million from two years ago. Accordingly, the first stage extraordinary period of change on the path to a new and of a three-year technology and systems upgrade began sustainable future.